China's family wealth management industry growing strongly

China's family wealth management industry saw robust development in 2021 amid steady economic growth, a private report said.

With the promotion of the "common prosperity" strategy and the continuous optimization of China's laws and regulations in the financial sector, the sector is welcoming huge development opportunities, according to a joint report by wealth management company Honghu Best Global Family Office and information platform The Asian Banker.

And the country's stable macroeconomic environment has provided a solid guarantee for the sound and steady operation of family wealth offices, the report said.

According to the International Monetary Fund's latest economic outlook, China's gross domestic product grew 2.3 percent in 2020 and is expected to grow 8 percent in 2021.

The country remains one of the world's largest savings markets and one of its fastest growing wealth management markets.

The report said the global family wealth management industry continues to grow in the face of the COVID-19 pandemic, with more efficient internal management and new trends in areas such as investment, tax planning, asset protection, and next-generation education.

At the same time, global high-net-worth individuals are beginning to pay more attention to sustainable investments and philanthropy.

Kang Chaofeng, chairman of the Honghu Best Global Family Office, said the current family wealth management industry in China is similar to the trust industry in the past decade and is expected to explode in the next 10 years.

Wu Fei, professor of the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, believed that with global promotion of tax transparency and stricter domestic tax regulation, stronger tax policies will be released and implemented in the financial sector.

To bolster the wealth management industry, family offices should step up their services in tax compliance, Wu stressed.

"The inheritance of wealth and common prosperity are not contradictory, but greater emphasis should be laid on how to achieve common prosperity along with inheritance," said Pan Xilong, associate professor at Southwest University of Finance & Economics.

This involves the definition of the common prosperity circle, the optimization of the property rights system, the reason why family wealth diminishes with generations, and the methods and means to achieve common prosperity, Pan said.